Ian Cowie was named Consumer Affairs Journalist of the Year in the
London Press Club Awards 2012. He has been head of personal finance at
Telegraph Media Group since 2008, having been personal finance editor
since 1989. He joined the paper in 1986. He is @iancowie on Twitter.

Why the tax transparency striptease by politicians will end in anticlimax

For example, leading accountants tell me that MPs are not required to disclose details of their expenses claims on their tax returns – and so these potentially fascinating facts need not be aired under this week’s promises of ‘tax transparency’ by politicians.

Back then, I said: “Second home allowances and other expenses average more than double the MPs’ basic salary of £63,291 and are not subject to tax. But accountants point out that constituents who were lucky enough to receive such sums from their employers would have to share 40pc with HMRC.”

Here and now, John Whiting, a director of the Chartered Institute of Taxation, told me: “I don’t think anything much has changed from a tax law point of view. The basic rules that govern what is taxable – and what expenses are deductible – are still the same, including for example the rules around MPs’ termination payments. I believe HMRC still has the special office referred to in your previous article.

“Much of what appears unusual as regards the taxation of MPs stems from the arrangements around their pay, rather than necessarily the tax rules. For example, MPs are employees of Parliament rather than self-employed, though their roles have aspects of self-employment about them.

“Normally, employers will provide employees with the office or factory space and relevant equipment and employ the other staff who work with the employee. MPs are, however, given allowances to cover office costs, staffing and so on.”

Similarly, George Bull, a senior partner at accountants Baker Tilly, advises: “So far as I am aware, the mechanism for dealing with MPs’ tax returns remains the same. A special HMRC office continues to deal with their tax returns.

“There has been a certain amount of speculation as to what MPs have to include on their tax returns under the new regime. If an MP has to publish his or her tax return in full, then summary information on benefits and office expenses may be disclosed. I don’t think the precise scope of publishable information – if these proposals ever come to fruition – has been made clear.

“However, it is worth taking a close look at what is known as a ‘dispensation’ from HMRC. The effect of this is that qualifying expenses incurred by the MP, and matched by a reimbursement under the new rules, may not have to be shown on the tax return.”

Meanwhile, HMRC figures show that income tax receipts soared by 42pc over the last decade, to an eye-stretching £153bn last year. While there are good grounds for resenting tax dodgers – elected or otherwise – the taxman has clearly succeeded in getting his arm deeper into most people’s pockets.

Mr Bull added: “It is also important to note that tax returns will not generally contain information in respect of property sales where the main residence exemption is available in full to cover any gain.”

Readers may recall that many MPs’ practice of ‘flipping’ homes – or switching which property they deemed to be their main or second residence for the purpose of maximising expenses claims and minimising tax liabilities – was a major theme of the MPs’ expenses scandal.

So it is disappointing, to put it mildly, to learn that this important aspect of their tax affairs looks likely to remain under wraps, despite all the talk of ‘tax transparency’. After such an anticlimax, perhaps the punters could be forgiven for demanding their money back.